Yukon-Kuskokwim Health Corp. v. National Labor Relations Board

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued September 7, 2000 Decided December 19, 2000

No. 99-1440

Yukon-Kuskokwim Health Corporation,

Petitioner

v.

National Labor Relations Board,

Respondent

On Petition for Review and Cross-Application for

Enforcement of an Order of the

National Labor Relations Board

James E. Glaze argued the cause for petitioner. With him

on the briefs were Lloyd Benton Miller, Donald J. Simon,

Stephen H. Hutchings and Douglas S. Burdin.

Sharon I. Block, Attorney, National Labor Relations

Board, argued the cause for respondent. With her on the

brief were Leonard R. Page, General Counsel, Linda Sher,

Associate General Counsel, Aileen A. Armstrong, Deputy

Associate General Counsel, and Charles Donnelly, Superviso-

ry Attorney.

Before: Ginsburg, Randolph and Tatel, Circuit Judges.

Opinion for the Court filed by Circuit Judge Ginsburg.

Separate statement dissenting in part filed by Circuit

Judge Randolph.

Ginsburg, Circuit Judge: The Yukon-Kuskokwim Health

Corporation (Yukon), a non-profit organization controlled by

Alaska Native tribes, challenges the National Labor Relations

Board's assertion of jurisdiction over a hospital that Yukon

operates. The Board properly rejected the employer's claim

to be exempt pursuant to s 2(2) of the National Labor

Relations Act (NLRA) on the ground that it is an Indian tribe

acting in a governmental capacity. The Board failed, howev-

er, to consider the employer's argument that it is entitled to

exemption under s 2(2) because the Indian Self-

Determination Act (ISDA) authorizes it to act as an arm of,

and thus to share in the exemption of, the United States.

Accordingly, we remand this matter to the Board for further

proceedings.

I. Background

A group of Alaska Native tribes formed Yukon in 1969 to

provide health services, primarily to Alaska Natives, in South-

western Alaska. Yukon is controlled by a board of directors

elected by the tribal councils of the 58 tribes in the region.

In 1975 the Congress enacted the ISDA, 25 U.S.C. ss 450

et seq., to bring about "an orderly transition from the Federal

domination of programs for, and services to, Indians to

effective and meaningful participation by Indian people in the

planning, conduct, and administration of those programs and

services." 25 U.S.C. s 450a(b). The federal government

recognized Yukon as an "Indian tribe" for purposes of the

ISDA and, pursuant to that statute, Yukon began to assume

responsibility from the Indian Health Service, an agency

within the U.S. Department of Health and Human Services,

for the operation of clinics in native villages throughout

Southwestern Alaska.

In 1991 Yukon took over a hospital previously operated by

the IHS in Bethel, Alaska, the largest town in the region.

Most of the federal employees at the hospital, including 40

nurses, remained on staff. In 1996 the Board received an

election petition from a union seeking to represent the nurs-

es. Yukon opposed the petition on the basis of s 2(2) of the

NLRA, which excludes from the definition of "employer" "the

United States or any wholly owned Government corporation

... or any State or political subdivision thereof." 29 U.S.C.

s 152(2). Yukon argued that it qualified for exemption under

s 2(2) both as a political subdivision (because it is an Indian

tribe acting in a governmental capacity) and as an arm of the

United States (because it operates a federal hospital pursuant

to the ISDA).

The Board overruled Yukon's objection on the ground that

the Board had never applied the exemption in s 2(2) to the

activities of an Indian tribe not conducted on an Indian

reservation. The Board certified the union and Yukon took a

refusal to bargain charge so that it could get judicial review

of the Board's order under ss 10(e) and (f) of the NLRA. 29

U.S. ss 160(e) and (f).

II. Analysis

Yukon advances two arguments for the proposition that its

hospital is not subject to the NLRA. First, Yukon argues

that it qualifies under s 2(2) as a "State or political subdivi-

sion" because it is an Indian tribe acting in a governmental

capacity. Second, Yukon argues that it shares in the exemp-

tion that s 2(2) grants to the federal government because the

ISDA authorizes it to operate a federal hospital pursuant to a

government-to-government compact with the United States.

A. Governmental Capacity

Yukon argues that the Board acted arbitrarily in limiting

the exemption afforded to Indian tribes under s 2(2) to

activities conducted on a reservation, rather than limiting the

exemption to "governmental activities" of Indian tribes, wher-

ever conducted. In our review of the Board's decision, we

"must accept the Board's position unless it conflicts with the

'unambiguously expressed intent' of the Congress or is [oth-

erwise] not 'a permissible construction of the statute.' " Hor-

mel v. NLRB, 962 F.2d 1061, 1065 (D.C. Cir. 1992) (quoting

Chevron v. NRDC, 467 U.S. 837, 843 (1984)).

In the past, the Board has interpreted the exemption under

s 2(2) for "any State or political subdivision thereof," to

include "entities that are either (1) created directly by the

State, so as to constitute departments or administrative arms

of the government, or (2) administered by individuals who are

responsible to public officials or to the general electorate."

NLRB v. Natural Gas Utility District of Hawkins County,

Tennessee, 402 U.S. 600, 604-605 (1971). In Fort Apache

Timber Co. v. NLRB, 1976-77 NLRB Dec. (CCH) p 17,475

(Oct. 19, 1976), the Board applied this test to conclude that

because "the Fort Apache Timber Company is an entity

administered by individuals directly responsible to the Tribal

Council ... [it is] exempt as a governmental entity recog-

nized by the United States, to whose employees the Act was

never intended to apply." Id. at 28,876 n.22.

More recently, in Southern Indian Health Council v.

NLRB, 1988-89 NLRB Dec. (CCH) p 15,052 (July 29, 1998),

the Board applied the "direct responsibility" test to a hospital

located on a reservation and operated by a consortium of

seven tribes. The Board concluded that the hospital was

exempt from the NLRA pursuant to the "State or political

subdivision" exemption because "the directors of the Employ-

er are directly appointed by, and subject to removal by, the

governing bodies of the member tribes." Id. at 28,226.

Later, in Sac & Fox Industries v. NLRB, 1992-93 NLRB

Dec. (CCH) p 17,250 (Apr. 24, 1992), the Board modified its

test for application of the "State or political subdivision"

exemption to Indian tribes. In that case the tribe had

secured a $30 million supply contract with the Department of

Defense, for which it had built or acquired four factories not

on its reservation. Many of the workers employed at the

acquired factories previously had been represented by a

union, but the tribe argued that its substitution as the em-

ployer made the operation exempt from the NLRA and,

hence, from the obligation to bargain with the union. The

Board rejected this claim, explaining that "[a]lthough the

Board's decision in Fort Apache [ ] contains statements to the

contrary ... we read that decision as limited to situations in

which the tribal enterprise is located on the reservation." Id.

at 32,416.

Yukon argues that the Board should read Sac & Fox as

having denied exemption to the off-reservation factories in

material part because of their commercial nature, not simply

because of their location off the reservation. The Board,

however, has never drawn a distinction based upon the nature

of the Indian enterprise. The Board first said somewhat

tentatively in Sac & Fox that the "exemption in Section 2(2)

for a 'political subdivision' of a 'State' does not clearly include

an off-reservation tribal enterprise." Id. Now, the Board

has firmly concluded that an Indian tribe does not qualify as a

"State or political subdivision" for purposes of s 2(2) when it

conducts activities off its reservation. We can hardly say that

position is unreasonable.

An Indian tribe, like any other governmental unit, typically

operates in its governmental capacity only within its geo-

graphical jurisdiction. There are, to be sure, exceptions to

that general rule, as recognized, for example, in the Foreign

Sovereign Immunities Act (FSIA), 28 U.S.C. s 1605(a)(2).

The distinction between commercial and governmental activi-

ties, however, is often elusive, see Princz v. Federal Republic

of Germany, 26 F.3d 1166, 1172 (D.C. Cir. 1994) (noting that

FSIA, rather than attempting to define "commercial" and

"governmental" activity, leaves to courts the task of distin-

guishing between the two), and the Board has long and

reasonably preferred bright line rules in order to avoid

disputes over its jurisdiction. See, e.g., Siemons Mailing

Service, 122 N.L.R.B. 81, 85 (1958) (setting dollar threshold

for the "effect on commerce" sufficient to support Board

jurisdiction). Accordingly, we defer to the Board's interpre-

tation and reject Yukon's argument to the contrary.

B. The ISDA

Yukon also argues that it is exempt from the NLRA

pursuant to s 2(2) because that provision exempts "the Unit-

ed States" and here Yukon "stepped into the shoes of" and

"acts exactly for, and as, the United States" because it

operates a federal hospital pursuant to a government-to-

government compact authorized under the ISDA.* Addition-

ally, Yukon argues that for the Board to assert jurisdiction

over it would undermine the purpose of the ISDA, namely, to

increase tribal self-governance.

In the decision under review the Board mentioned but

dismissed the ISDA in a single sentence:

We further reject the Employer's contention that it is

exempt from coverage because in light of the govern-

ment-to-government Compact delegating Federal func-

tions to the tribes on Federal property reserved and

intended for that purpose, the Employer functions as an

arm to [sic] the United States, and is, thus, an 'integral

part of the government of the United States as a whole.'

328 NLRB No. 101 at 4. The Board then repeated its

conclusion that it has limited tribes' exemption under s 2(2)

"to situations in which the tribal enterprise is located on the

reservation." Id. (emphasis in original). The Board appears

simply to have misunderstood the tribe's argument here,

which is that its exemption derives not from its own sover-

eignty as an entity akin to a "State or political subdivision"

but, rather, from the exemption granted to "the United

States." For the Board to limit to the confines of an Indian

__________

* Judge Randolph, in his dissent, states that his "colleagues think

that perhaps Yukon also wanted to be considered the United States

for the purpose of s 2(2)." Lest we be thought utterly mad, he

acknowledges a "hint here and there" in its briefs to this court that

Yukon "might have had this in mind," but says that this was not

"the thrust of its presentation," either before the Board or here.

We think that it was a thrust. The heading of Part IV of Yukon's

brief to the Board asserted that "The 58 Tribes are Exempt as an

Integral Part of the United States [Government]," and the ensuing

five pages (28-33) were devoted to arguing the point. Yukon

renewed the argument before this court in the section of its brief

headed "Tribes operating pursuant to the [ISDA] are treated as the

equivalent of federal agencies under the [NLRA]."

reservation the exemption granted to the United States

makes no sense. Additionally, the Board wholly failed to

address Yukon's argument that asserting jurisdiction over the

hospital would "directly contraven[e] the ISDA's goal" of

increasing tribal self-governance.

As this court explained in New York Shipping v. Federal

Maritime Commission, 854 F.2d 1338, 1370 (1988):

[A]n agency, faced with alternative methods of effectuat-

ing the policies of the statute it administers, (1) must

engage in a careful analysis of the possible effects those

alternative courses of action may have on the functioning

and policies of other statutory regimes, with which a

conflict is claimed; and (2) must explain why the action

taken minimizes, to the extent possible, its intrusion into

policies that are more properly the province of another

agency or statutory regime.

The ISDA is undoubtedly intended to remove tribal programs

from federal oversight. See Oklahoma Tax Comm'n v. Citi-

zen Band Potawatomi Indian Tribe, 498 U.S. 505, 510 (1991)

(noting that ISDA "reflect[s] Congress'[s] desire to promote

the goal of Indian self-government"). Indeed, in the amend-

ments to the ISDA enacted while this case was on review, the

Congress renewed its commitment to Indian self-

determination. See Tribal Self-Governance Amendments of

2000, P.L. 106-260, 114 Stat. 711 s 2(3) (Aug. 18, 2000).

The Board's one-sentence rejection of Yukon's arguments

from the ISDA both relies upon what, in this context, is an

irrelevant distinction and ignores the Board's obligation to

address and to minimize conflict with another statutory re-

gime with which a disparity is claimed. Although the General

Counsel of the Board, in her argument before this court,

addressed in somewhat greater detail the Board's possible

reasons for rejecting Yukon's arguments from the ISDA,

" 'courts may not accept appellate counsel's post hoc rationali-

zations for agency action.' " NLRB v. Metropolitan Life.

Ins., 380 U.S. 438, 444 (1965) (quoting Burlington Truck

Lines v. United States, 371 U.S. 156, 168 (1962)).

The Board's inadequate attention to the ISDA requires

that we remand this matter to the agency for further consid-

eration. See, e.g., Iowa v. FCC, 218 F.3d 756 (D.C. Cir. 2000)

(remanding for agency to address potentially dispositive argu-

ment). On remand, the agency must determine whether

Yukon qualifies as "the United States" for purposes of s 2(2);

in reaching its conclusion, the Board will need to consider

what allowance, if any, the NLRA must make in order to

accommodate federal Indian law, as reflected in the ISDA.

As we noted in New York Shipping, our review of such a

determination "remains a matter of checking the [Board]

against the terms of the [labor] laws. This is precisely the

type of appellate exercise governed by Chevron; our review

must be correlatively deferential." 854 F.2d at 1364. It is

for the agency, therefore, to consider the petitioner's argu-

ment in the first instance.

III. Conclusion

For the reason set out in Part II B above, we deny

enforcement of the order issued by the Board and remand

this case to the agency for further consideration of the

petitioner's argument from the ISDA.

So ordered.

Randolph, Circuit Judge, dissenting in part: I agree with

the court's opinion except for part II.B., which remands the

case to the Board for "further consideration of the petitioner's

argument from the" Indian Self-Determination Act. Maj. op.

at 8.

No principle of administrative law compels an agency to

respond to gibberish. It is therefore understandable that the

Board never responded to an argument that the Indian Self-

Determination Act removed Yukon from the Board's jurisdic-

tion. Maj. op. at 6. The Board did not respond because

Yukon never made any coherent argument to this effect.

And it barely managed to make one in this court. About all

Yukon did before the Board and before us is slap the Self-

Determination Act down on the table in the hope that some-

one will figure out why it should matter.

Here are the few assertions Yukon presented to the Board

regarding the statute. The Self-Determination Act "autho-

rizes and encourages tribal governments to assume operation

of federal Indian programs." Employer's Brief on Review of

Jurisdictional Determination at 5. Indeed it does. "Through

the Act, Congress intended to shift programs from the feder-

al government to tribal governments, thereby reducing feder-

al domination of Indian programs." Id. That appears cor-

rect. "Nothing in the federal government's authorization

requires that the tribes' ... activities [conducted pursuant to

the Self-Determination Act] occur 'on reservation.' " Id. at 8.

This is obvious; Yukon's hospital is not on a reservation. (No

one--the Board included--has required Yukon or any Indian

tribe to conduct such activities on reservations.) What then

is Yukon's point? All of its statements about the Self-

Determination Act are contained in the section of its brief

claiming an exemption as a state or federal government under

s 2(2). The section's heading is entitled "THE HOSPITAL

IS OPERATED BY FEDERALLY RECOGNIZED SOV-

EREIGN TRIBES ENTITLED TO THE GOVERNMEN-

TAL EXEMPTION." Id. at 4. The "governmental exemp-

tion" is s 2(2) of the National Labor Relations Act, 29 U.S.C.

s 152(2), the provision granting an exemption to the federal

government and state and local governments. The Board

rejected this argument, correctly we all agree at least to the

extent Yukon wanted to be considered a state. So what was

left of Yukon's reliance on the Self-Determination Act in its

case before the Board? There are two possibilities--nothing

or nothing comprehensible. In either event, the Board had

no duty to respond.

My colleagues think that perhaps Yukon also wanted to be

considered the United States for the purpose of s 2(2). (The

section provides in relevant part that the term employer

"shall not include the United States or any wholly owned

Government corporation." 29 U.S.C. s 152(2).) Yukon's

briefs in this court hint here and there that it might have had

this in mind, although the thrust of its presentation to this

court and the Board was the rather inconsistent assertion

that it--Yukon--was a separate, independent sovereign. See,

e.g., Brief of Petitioner at 36 (characterizing relationship

under Self-Determination Act as "inter-governmental delega-

tion, transferring responsibility from one sovereign to anoth-

er"); Employer's Brief on Review of Jurisdictional Determi-

nation (No. 19-RC-13271) at 5 ("[a]ccess to the benefits of the

Act is only available to sovereigns"); id. ("by definition under

the Act, only sovereigns may compact as an exercise of their

sovereignty").

At all events, the Board said enough on this subject, given

the incoherence of Yukon's position. The Board wrote: "Sig-

nificantly, the Employer was not brought into existence by a

special legislative Act. Rather, it is a regional nonprofit

corporation formed ... under applicable Alaska laws. Under

these circumstances, we find that the Employer is not exempt

under Section 2(2) 'as an integral part of the government of

the United States as a whole.' " Decision and Order, Yukon

Kuskokwim Health Corp., 329 N.L.R.B. No. 101 at 4 (June

18, 1999). In other words, whatever the Self-Determination

Act means, or whatever Yukon thinks it means, Yukon re-

mains an independent Alaska corporation, not a part of the

government of the United States. If Yukon believes the Act

provides otherwise, it has yet to explain why.